General Electric Co.'s Current Situation and Future Outlook

...

The company has moreover engaged itself in 2005 in an "ecomagination" scheme to promote its image as a future green company, producing hybrid automobiles, photovoltaic energy, water recycling etc., adding therefore to its initial list of branches, a new division titled GE Renewable Energy.

Besides, in 2015, a new unit was created: GE Imaging that has a purpose of manufacturing digital cameras, benefiting thus from the company's past experience in IT and software .

It is to be mentioned that the former GE Appliances section (that used to produce refrigerators, dishwashers, ovens, heaters etc.) was last year traded to Haier for $5.4 billion (GE's website, 2017).

All of the above can be referred to as the GE platforms or the GE store (figure 1).

[pic 2]

Figure 1: The GE store

Source: ge.com

Speaking of which, many believe that since over half of the company's revenue stems from financial solutions, it is tenable that GE tends to be more a financial services provider, stocked with an engineering /mass production arm. In fact, the company seems to be a prominent lender to countries outside the US such as Japan (Chatsko, 2014).

- Relationship with suppliers and markets in which it operates

- Chain suppliers

Before diving into who are the key suppliers to GE, it is better to view their supply chain approach. According to their website (2017), General Electric is in the “National Minority Supplier Development Council” which is dedicated to promote supplier diversity, as they put it. Having that in mind, one expects to find a broad range of suppliers from different regions involved with a giant such as General Electric. According to Tim Smith (2016), however, the majority of their suppliers are in the US. Despite that, the main key players that supply to GE according to Smith are as follows: Repligen Corporation which develops medicines for diseases associated with the central nervous system and supplies General Electric health division with health products and medicines. This company generates thirty-seven percent revenue from GE! The second would be Hong Kong Aircraft Engineering Corporation, which is an electronics company, in Hong Kong. The company maintains and overhauls commercial aircraft. It provides aircraft checks and reconfigurations of their engines. The company generates twenty-seven percent in revenue from General Electric. Third is Nortech Systems, which caters to different General Electric’s segments by supplying cables, wires and monitors to be used in radars and imaging. This company generates twenty-three percent of its revenue from General Electric. Fourth is Genpact, which supplies the financial division of General Electric by supplying IT services, Quality-Assurances, in addition to providing support for production and to test. This company generates around nineteen percent of its revenues from General Electric. The last key supplier would be Wind Energy Corporation called Jiangsu Sinojit, which supplies General Electric’s energy division with infrastructures such as renewable energy hubs and shafts etc… This company generates about eighteen percent of its revenues from General Electric.

- Creating value through strategic sourcing

Suppliers are considered the major partners in GE’s value chain and a considerable mean to gain competitive advantage.

Strategic Sourcing for GE is a process that reduces costs and risk, while building stronger relations with fewer and critical suppliers. This process falls under 7 major steps that are constantly taken :

- Development of Commodity Profile:

- To acknowledge the requirements of their users

- Come up with Classification Meanings

- To figure out the markets they operate in

- Generation of Supplier Portfolio:

- Distinguish evaluated providers

- Decide about providers' abilities and added value

- Create supplier “short list”

- Development of Sourcing Strategy:

- Survey bargaining position

- Assess alternative methodologies of suppliers

- Select fitting approaches and systems

- Selection of an Implementation Plan:

- Assess competitive vs. relationship approach

- Verify and conform sourcing methodology with input

- Develop implementation plan

- Negotiation and Selection of Suppliers:

- Plan negotiation strategy

- Conduct negotiation with supplier

- Measure the proposals of the supplier

- Concretization of agreements

- Arrange move to new providers

- Include new pricing on databases

- Measure Providers (may extend timing)

- Sustainability of the results:

- Monitor market conditions

- Assess effect of new innovation and technology

- Determine opportunities to reexamine process

- GE’s Suppliers' Responsibilities

GE works only with suppliers that agree to all its legal and administrative requirements. Providers should therefore comply with basic regulations under any buy request or any transaction. Some unacceptable practices by suppliers were also mentioned and include for instance the following:

- The supplier should not employ workers under the age of 16

- Forced Labor is prohibited

- Supplier should comply to ecological laws and standards, and should give specialists a work environment that meets pertinent well-being and security guidelines